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Country Report December 2003 Country Report December 2003 Fiji December 2003 The Economist Intelligence Unit 15 Regent St, London SW1Y 4LR United Kingdom The Economist Intelligence Unit The Economist Intelligence Unit is a specialist publisher serving companies establishing and managing operations across national borders. For over 50 years it has been a source of information on business developments, economic and political trends, government regulations and corporate practice worldwide. The Economist Intelligence Unit delivers its information in four ways: through its digital portfolio, where the latest analysis is updated daily; through printed subscription products ranging from newsletters to annual reference works; through research reports; and by organising seminars and presentations. The firm is a member of The Economist Group. London New York Hong Kong The Economist Intelligence Unit The Economist Intelligence Unit The Economist Intelligence Unit 15 Regent St The Economist Building 60/F, Central Plaza London 111 West 57th Street 18 Harbour Road SW1Y 4LR New York Wanchai United Kingdom NY 10019, US Hong Kong Tel: (44.20) 7830 1007 Tel: (1.212) 554 0600 Tel: (852) 2585 3888 Fax: (44.20) 7830 1023 Fax: (1.212) 586 0248 Fax: (852) 2802 7638 E-mail: [email protected] E-mail: [email protected] E-mail: [email protected] Website: www.eiu.com Electronic delivery This publication can be viewed by subscribing online at www.store.eiu.com Reports are also available in various other electronic formats, such as CD-ROM, Lotus Notes, online databases and as direct feeds to corporate intranets. For further information, please contact your nearest Economist Intelligence Unit office Copyright © 2003 The Economist Intelligence Unit Limited. All rights reserved. Neither this publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of The Economist Intelligence Unit Limited. All information in this report is verified to the best of the author's and the publisher's ability. However, the Economist Intelligence Unit does not accept responsibility for any loss arising from reliance on it. ISSN Symbols for tables “n/a” means not available; “–” means not applicable Printed and distributed by Patersons Dartford, Questor Trade Park, 151 Avery Way, Dartford, Kent DA1 1JS, UK. Fiji 1 Contents 3 Summary 3 Fiji 3 The region 4 The region 4 Outlook for 2004-05 5 The political scene 6 Economic policy and the domestic economy 7 Political structure 8 Economic structure 8 Annual indicators 9 Quarterly indicators 10 Outlook for 2004-05 11 The political scene 13 Economic policy 14 The domestic economy List of figures 15 Gross domestic product 15 Consumer price inflation Country Report December 2003 www.eiu.com © The Economist Intelligence Unit Limited 2003 2 Fiji Summary December 2003 Outlook for 2004-05 The outcome of a political duel between by the prime minister, Laisenia Qarase, and the leader of the Fiji Labour Party (FLP), Mahendra Chaudhry, over the composition of the cabinet has been referred back to the Supreme Court, and political uncertainty will therefore continue well into 2004. More coup- related trials next year could revive sentiments of Fijian nationalism. The ailing state of the sugar industry will mar otherwise bright economic prospects. The political scene The tussle over the number of cabinet jobs to which the FLP is entitled has been referred back, by mutual agreement, to the president, Ratu Josefa Iloilo, who has passed the matter to the Supreme Court. There are signs that the Indian community is growing tired of Mr Chaudhry’s confrontational style. Outside the political arena, efforts have been made to heal divisions between the Indian and indigenous-Fijian communities. Economic policy and the The government is likely to have exceeded its budget deficit target for 2003. It domestic economy rather optimistically hopes to reduce the budget deficit to 3.5% of GDP in 2004. The 2004 budget contains a mixed bag of tax changes. Plans to scrap civil servants’ cost-of-living rises have been criticised by the major public-service trade unions. Concern about the sugar industry has overshadowed the economic recovery. The region Outlook for 2004-05 Australia’s intervention in the Solomon Islands and a gradual amelioration of communal stresses in Fiji should help improve political stability in the region. Despite modest growth, little headway will be made by small, isolated and resource-poor island nations in tackling their many problems. The political scene Debate over the appointment of an Australian, Greg Urwin, as secretary-general of the Pacific Islands Forum has quickly subsided. China and Taiwan have continued to woo the island nations with aid. The region has begun to face up to the spread of HIV/AIDS. Economic policy and the Island countries have been warned that they are ill-prepared to cope with domestic economy Severe Acute Respiratory Syndrome (SARS). Tourism bookings are set to pick up in 2004, although the launch of Pacific Blue, the new offshoot of Virgin Blue, an Australian-based budget airline, has been pushed back to mid-2004. The islands have begun to prepare for trade negotiations with the EU. Concern is growing about the depletion of tuna stocks. Editors: Kate Allard (editor); Graham Richardson (consulting editor) Editorial closing date: December 3rd 2003 All queries: Tel: (44.20) 7830 1007 E-mail: [email protected] Next report: Full schedule on www.eiu.com/schedule Country Report December 2003 www.eiu.com © The Economist Intelligence Unit Limited 2003 Fiji 3 The region Outlook for 2004-05 Most island nations will Australia’s intervention in the Solomon Islands, a reshaping of its aid relations experience modest growth with Papua New Guinea (PNG) and a gradual amelioration of communal stresses in Fiji should help improve political stability in the region. The Economist Intelligence Unit anticipates modest growth for most of the island nations, along with a continued fall in inflation, with most island nations banking on tourism and the exploitation of tuna stocks for their future economic security. However, little headway will be made by small, isolated and resource-poor countries in tackling problems presented by population pressures in some island nations, migration in others, environmental degradation, corruption and weak economic growth. After a decade of near-inaction, Pacific island governments are finally facing up to the advance of HIV/AIDS into the region. But we remain pessimistic about the ability of most governments to overcome this and other challenges without steady, sympathetic support, coupled with measured pressure, from aid donors. Another Australian-led Australia’s firm hand in the Solomon Islands is broadly approved of, although intervention is unlikely not necessarily publicly so, by the other 13 island members of the Pacific Islands Forum (the main regional body). In the Solomon Islands in particular, grass-roots opinion is generally one of relief felt by a people disillusioned by the erosion of basic government services, worsening employment oppor- tunities, lack of development and rising crime, made worse by corruption and poor governance. However, the picture of the region often portrayed—one of general lawlessness, political and economic collapse and infiltration by undesirable foreign forces—is probably exaggerated. With the exceptions of the chaos and national insolvency associated with a succession of governments in Nauru and the long-term prospect of a democracy-inspired change of govern- ment in monarchist Tonga, the Pacific island states are generally more stable that they are given credit for, and an intervention such as that currently under way in the Solomon Islands is unlikely to occur elsewhere in the region. The island nations will Given the inevitable economic weaknesses stemming from their isolated struggle to fulfil aid conditions geographical position and, in Polynesia and Micronesia, an acute lack of resources and land, the Pacific island states can be assured of continued substantial support from Australia, New Zealand, the EU, Japan and, increasingly, China, as well as institutions such as the Asian Development Bank and the UN Development Programme. However, while most island countries are resigned to the conditions, such as higher standards of governance, greater transparency and accountability, now being attached to aid, they are not well equipped to fulfil them. Country Report December 2003 www.eiu.com © The Economist Intelligence Unit Limited 2003 4 Fiji The political scene Debate over new Australian Debate over the appointment in August of an Australian, Greg Urwin, to the head of the PIF has subsided position of secretary-general of the Pacific Islands Forum or PIF (the post has traditionally gone to a Pacific islander) quickly subsided. During and after the PIF summit meeting at which delegates failed to reach consensus on a replace- ment from the Pacific islands for the incumbent, Noel Levi of PNG, some leaders chose to interpret Mr Urwin’s appointment as yet another symbol of Australia’s strong hand in the region. But privately many regional bureaucrats and PIF staff agreed that Mr Urwin was by far the best candidate to implement improvements to the organisation and redirect work programmes and policies While attending the Asia-Pacific Economic Cooperation (APEC) summit meeting in November as an observer, the retiring PIF secretary-general, Mr Levi, asked APEC members to consider extending their relationship with PIF members in the same way as the EU has already done. Mr Levi also suggested that APEC assist PIF countries in compiling individual country reports for inclusion in APEC’s investment climate guide. In his address to the Conference of the Pacific Community in Suva in November, the prime minister of Fiji, Laisenia Qarase, complained that the number of regional organisations had mushroomed in recent years, diverting island governments’ scarce financial resources to regional and international bureaucracies.
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